The invention disclosed herein relates to counterfeit detection methods.
When an object, such as a product or document, is worth disproportionately more than the cost of its manufacture, it may be counterfeited at a profit. For example, manufacturers of proprietary products lose billions of dollars each year because their most successful products are often targeted by counterfeiters who produce spurious goods locally or overseas. When counterfeit goods are of similar or identical quality to the original, a manufacturer suffers from a continuous loss of sales as counterfeiting continues unchecked, because detection is difficult or impossible. Inferior counterfeit products may be more easily detected, but in addition to the above, they also jeopardize future sales of non-counterfeited products by marring reputation. In either case, the manufacturer's continuing level of untold lost profits due to counterfeit may be dramatic. Similar concerns arise with counterfeit documents.
A partial listing of products susceptible to being counterfeited includes: airplane parts; art; auto parts; baby products--formula, diapers, clothing; books; computers; computer peripherals; cosmetics; designer goods--clothing, shoes, eye glasses; electronics; entertainment recordings--CDs, records, audio and video cassettes; games-board, firmware, handheld; military parts; optics--binoculars, cameras; pharmaceuticals; software; tools; toys; watches.
Documents susceptible to fraud (including counterfeit) include: betting tickets (lottery, sports, etc); bonds (Treasury, commercial, etc); certificates (birth, gift, warranty, etc); checks (personal, commercial, travelers, etc); coupons; credit cards; currency; licenses (driver, business, import/export, etc); passports; scrip (store, amusement park, etc); stamps (postage, food, etc); stocks; tickets (concerts, sports, theater, etc); travel tickets (airline, commuter, etc), and so forth.
Staggering losses due to counterfeit are estimated. For example, the International Anti-Counterfeiting Coalition, IACC, located in Washington, D.C., fears annual losses of $100,000,000,000 (no mistake--one hundred billion dollars!). On Apr. 23, 1990, U.S. Attorney Stephen J. Markman reported the following to the IACC:
"In addition to safety, the economic loss from
counterfeit products is enormous: The big three automakers estimate that they lose 240,000 jobs each year in the greater Detroit metropolitan area a/one due to counterfeiting of auto parts."
Two approaches for detecting counterfeit are: mechanical-based on conformity, and intellectual--based on uniqueness. These two counterfeit detection philosophies are based on fundamental underlying principles which are diametrically opposed to each other, conformity versus uniqueness.
Mechanical counterfeit detection techniques require physical examination and/or analysis of the object. The underlying principle here is conformity. Genuine objects are identical to each other while counterfeits must somehow be different. The difference between the genuine and fake must be discernible in order to detect counterfeit. For example, all U.S. currency is printed on special paper. Therefore, if a suspected bill's paper is discovered to be different, the bill is counterfeit.
Mechanical means alone cannot be relied upon. What one can make or print, another can as well. This creates inherent weaknesses. For example, some counterfeiters of U.S. currency have outwitted the special paper deterrent scheme described above by bleaching the ink off $1 bills and reusing the paper to print $100 bills, while other counterfeiters manufacture their own special paper which is sufficiently similar for their purposes.
Intellectual counterfeit detection and/or authentication techniques may; include signatures, numbers and/or other indicia for coding each genuine object differently. The underlying principle here is uniqueness. Each genuine object is individually signed, or assigned individual identifying information. Traditional ways to individually authenticate objects are: sign or assign.
One traditional way to authenticate certain objects, namely documents, is to sign them. Each person's signature is effectively different. Even though many may be named John Smith or Chun Lee, i.e., many have the same indistinguishable identifying name, respective signatures are different. Typically, fraud involving documents with individuals' signatures thereon is characterized as forgery, versus counterfeit.
For example, valid serial numbers may readily be anticipated and printed by counterfeiters using available numbering devices, while forging a signature is another matter. Blank checks, available at stationery stores, for example, may be authorized by John Smith's signature if he is known, or if that signature is verifiable, perhaps by comparison to other signed documents. Signatures, for example, bridge mechanical and intellectual techniques, involving examination-by-eye.
Applicants' anti-counterfeit techniques address mass produced objects, unsigned products and documents, manufactured to be essentially identical to each other-the only convenient and distinguishable difference among such essentially identical objects being the presence of associated identifying information, such as serial numbers.
Mr. Smith's signed check, mentioned above, may involve other variable information. For example, the dollar amount, the transaction date, payee information, Mr. Smith's address and bank account number, information about his bank, and so forth. Examples of other articles with variable parameters are: birth certificates, credit cards, lottery tickets, passports, etc.
Applicants' address how to detect counterfeit objects among essentially identical objects, objects that do not have individually and/or inherently variable parameters, objects such as mass produced products and documents, objects that may be readily identified only by their respective identifying information.
This is not to suggest that certain aspects of applicants' inventions may not be used beneficially in association with signed documents, for example, to augment the authentication afforded by the signature, for example.
Another traditional way to uniquely identify objects is to assign serial numbers, by counting, in a most convenient and orderly fashion. However, traditional serial numbers offer little obstacle to a counterfeiter because he can, for example, assign matching ascending and descending numbers given one correct serial number as a start, thereby duplicating authorized numbers only once. Even if two objects with matching serial numbers were found, thereby finding at least one counterfeit, mechanical techniques may still be required to tell which is counterfeit.
Also, counterfeiters could avoid following a pattern that may be helpful to pursuing authorities if the pattern were discovered. For example, rather than serially numbering their fakes, counterfeiters may randomly select numbering within a wide range of known-to-be valid numbers, so that the possibility of a particular consecutive narrow range of serial numbers being discovered by authorities as having been counterfeited is avoided, making the job most difficult for the authorities (albeit more difficult, but safer, for the counterfeiters as well).
According to described aspects of applicants' invention, intellectual coding techniques may also offer "self-checking" counterfeit detection schemes (serf-checking is a term used with error control coding, adopted for use by applicants when referring to certain intellectual anti-counterfeit coding techniques). Applicants define self-checking as follows: if a single read identifying number does not conform to a secret code, or match up in a database, it must be counterfeit.
The use of a secret algorithm is disclosed in McNeight et al's U.S. Pat. No. 4,463,250. MeNeight et at. provides objects with authorized ID numbers that conform to an algorithm or code, so that these ID numbers may be verified or tested for apparent authenticity using the same algorithm. The algorithm is cautiously deployed in locations where it is desirable to detect counterfeit by determining if an object's ID number conforms to the secret algorithm. Caution is required in order to prevent theft or discovery of the algorithm. Authorized ID numbers conform to the algorithm, but the algorithm itself is selected and/or used so that it does not readily allow easy discovery or reverse engineering of the originating algorithm. The algorithm must be kept secret so that it is not also used by unauthorized personnel.
However, if the secret algorithm were to be stolen or discovered (as a computer "hacker" might delight in doing) one may be worse off with the secret algorithm than without, because a false sense of security could have adverse consequences. Consider for example, what if someone unauthorized discovered the secret algorithm but thereafter kept this discovery a secret from those authorized to use the secret algorithm, so that there was no inkling that the secret had fallen into the wrong hands? Genuine objects authorized by the secret algorithm's ID numbers may then be more vulnerable and susceptible to being counterfeited than if traditional serial numbers had been used in the first place.
An encryption algorithmic technique used to calculate security codes is disclosed in Peter White's U.S. Pat. No. 4,630,201. White's invention concerns security for checks and other transactions involving money. White, uses a table of random numbers. The same table of random numbers is associated both with a portable transaction device and with a bank's central processor.
For a check, for example, a random number is selected from the table in the transaction device and used to encode the dollar amount of the particular check using an encryption algorithm. The calculated result, a security code, is then put on the check. The authenticity of the security code on such a check may be verified, by recalculating the security code again, in the same manner, in the bank's central processor, and comparing the two security codes for a match.